Dan Hawkins: Governor’s plan to refinance KPERS would undo progress
Join me on a quick journey back to the early 2000s. Toby Keith and the Dixie Chicks were tearing up the country music charts and each other, the latest from the “Lord of the Rings” and “The Matrix” series of films were box office smashes, and the last elected Democrat governor of the state of Kansas had inherited a state retirement system that was over 75% funded. By the time the Democrats moved out of the governor’s office just eight years later, that funded ratio had plummeted well below 60%.
Since that time, Republicans have put a plan into place to put the Kansas Public Employee Retirement System (KPERS) — the public employee pension plan — back on stable ground. Under Republican administrations, the funded ratio has steadily improved to over 68% and climbing. Unfortunately, Gov. Laura Kelly wants to permanently take us back in time.
For the second year in a row, Kelly is proposing to reamortize KPERS. Reamortization is similar to refinancing a loan. If the governor’s latest proposal were to pass, Kansas taxpayers would be on the hook for an additional $4.4 billion in debt. Not only that, the path to a fully funded KPERS system would be pushed decades down the road. The governor’s plan would lower current payments, allowing her administration to spend those funds on other projects while she’s in office, with the bill coming due much later, when someone else is at the helm. By lowering the payments now, Kelly would put KPERS on less stable footing if an economic downturn were to occur. But even if the Trump economy were to continue indefinitely, the amount of long-term interest taxpayers would be forced to pay down the road would increase exponentially under the governor’s plan.
Republican-led changes beginning in 2012 have moved KPERS up into the middle of the pack in comparison to pension systems in other states, but the system it still underfunded. The KPERS Board of Trustees, tasked with overseeing the system, has come out in favor of staying on the current path. Their opposition to the governor’s reamortization plan must not be dismissed.
Our public employees have been paying into a retirement system with the understanding their employer would hold up its end of the bargain. KPERS is a retirement plan for those workers. It is not a bank to be used by Gov. Kelly to help fund her spending programs. KPERS is finally emerging from the funding crisis that occurred under the last Democrat administration, and we owe it to our public employees and Kansas taxpayers not to return to those days.